By Keith Brown, DTN Contributing Cotton Analyst 

The cotton market closed sharply higher Wednesday amid an ailing U.S. dollar, bullish performances in the grains and persisting hot-and-dry conditions in West Texas. The decline in the dollar is being precipitated by certain trader’s views over the civil unrest in the U.S. and the amounts of government stimulus now considered exorbitant.

Hot-and-dry conditions are now being seen in South America, as well as across the U.S. Upper Midwest. Those field conditions have combined to jump corn to new life-of-contract highs. Obviously, such strength is also encouraging cotton higher. Yet, the direct situation in West Texas seems not to be abating. The short-term weather forecast calls for some potential light rain this week across the Lubbock area, but whatever amount falls it will not be enough to break the drought.

Thursday, USDA will issue its weekly export-sales. Last week saw strong sales with Vietnam as the top buyer. Given the dollar has been declining over the past week, hopefully sales will be stout yet again.

Interesting to note that in recent days as prices have been rising, open interest (the total number of all participants) has been declining. This is a classic depiction of short-covering traders. In other words, traders who have previously placed short-sided bets on the market are now scrounging to cover those with net buying.

Thursday, May cotton closed at 84.20 cents, up 2.38 cents, July settled at 85.52 cents, up 2.33 cents and December ended at 82.71 cents, up 1.25 cents; estimated volume was 55,050 contracts.